Observations by an academic researcher on the use of “open”-ness as a competitive strategy, with a particular interest in coping with the commoditization of information goods and technologies in an Internet-enabled world.

Saturday, May 12, 2007

The front page story in Friday’s San Francisco Chronicle had an interesting lead:

From Madison Avenue to Hollywood, some of industry's most powerful entities are marshaling their forces to combat a company that has risen to the top of the business world in less than a decade.

Fear is the motivating factor. And with every passing quarter, there is more to be worried about if you count Google as a competitor.

The news peg was last week’s rumors about the possible alliance (or merger) between Microsoft and Yahoo. That purported alliance, in turn, is part of Microsoft’s ongoing campaign to build alliances against Google by claiming “as the enemy of your enemy, I’m you’re friend.” Reporter Verne Kopytoff found someone to give voice to his theme: “Essentially, the new Microsoft is Google.” The Chronicle enumerated the laundry list of fears by Google rivals.

Privacy advocates: Worry that Google’s collection of personal information will create a massive database that can be mined by government.

Source: Chronicle research

As its direct competitors have found, the breadth of Google’s control of certain aspects of our information economy are daunting. In the US, it leads its nearest search competitor (Yahoo) by more than 2:1 (54% vs. 22%). The verb “google” has become synonymous with “look something up on a search engine.”

The company has grown to $143 billion market capitalization — more than most of the Fortune 500 — with only 12,000 employees and revenues that rank it #241 on the list. In fact, Google’s market cap is nearly that of the leading firm on the Fortune 500, Wal-Mart, which has $197 billion).

This morning’s Chroniclereports that The City is willing to help Google in its goal of total world domination. The city controller blessed the mayor’s plan to have Google and EarthLink provide free citywide WiFi access, in hopes that some subscribers will pay $22 a month to triple their throughput over the tease version. However, some of socialist members of the city council* are hoping for a government-owned solution.

Friday’s story suggested that Google may falter, or, if it doesn’t falter, it will be a more benign monopolist than its predecessors. I predict that the latter prediction will be tested before the former.

* In the City-County of San Francisco, the city council is formally known as the County Board of Supervisors.